Council Rock Approves Preliminary-Final Budget For 2023-24

NEWTOWN, PA — The Council Rock School Board voted unanimously Thursday night to approve a preliminary final budget that would boost the tax rate by two percent in 2023-24.

The $267.9 million budget would keep the current educational program in place and will fund a $2.4 million shortfall between revenues and expenditures with $336,000 from the district’s educational initiatives fund balance and $2.1 million from its undesignated fund balance.

The budget also creates for the first time a rebate program for residents living on fixed incomes. That idea was put forth by board member Joseph Hidalgo and incorporated into the spending plan by the administration.

The budget also adds a few positions back to the budget that had been previously removed, including two security guards, several gifted teacher positions and two English Language Development positions, according to business administrator Anthony Rapp.

While the vote was unanimous, board member and finance committee chair Yota Palli said she would not vote to approve a final budget with a two percent tax increase, which she called “fiscally irresponsible” for relying, in part, on the district's undesignated fund balance.

“Digging into the fund balance has a downward, domino effect,” she argued, citing five year projections that if the board continued on its course of approving annual two percent tax increases and use of the fund balance to balance the budget, the fund balance would drop below the eight percent required to cover the district’s expenses if something major were to happen.

"A 2 percent tax increase is projected to have a detrimental affect on the well being of Council Rock and I consider it fiscally irresponsible to support it,” said Palli.

"We need to look at the numbers more closely. I believe a 2.5 or a 3 percent increase is needed and it is well below the Act 1 Index of 4.1 percent, which is on par with inflation,” said Palli. “As a school board director my priority is to keep the district strong and fiscally responsible. This budget includes a rebate to our fixed income residents and a 2.5 or a 3 percent increase will support the good standing of Council Rock.”

Board member Ed Tate added that the district has done a good job over the years of conservative budgeting and at times has exceeded budget revenue projections and has under spent historically every year. We ended up with a balance of one percent or less.

“Ms. Palli’s point is a good one. If we increase taxes two percent we will be fine. However it is not sustainable,” he warned.

“One year later we’re looking at a deficit of $4.3 million and that immediately comes out of the fund reserve, which takes it down to $17 million a year later. And by 2025 we would have a net operating deficit of $3.6 million and our fund reserve is down to $13.3 million, which is below the district's five percent minimum for fund reserve.

“We need a budget that provides some predictability for our taxpayers. We are not going to be able to sustain a two percent tax increase,” he said.

Board member Mariann McKee said she shares Palli’s concerns for the future, but said she would be supporting the proposed final budget for 2023-24 as proposed.

Board member Mike Thorwart responded to what he called “scary numbers” being put out by Palli and Tate. “We don’t know that,” he said of the projections. “I’m real comfortable with where we are and I really think if we’re going to talk about scary numbers we should put the whole model out there and tear it apart.”

Board member Bob Hickey added that he will not vote for anything higher than a two percent tax increase. “To tax those on fixed incomes anything more than we have to and when we are not taking away services, for the 65 percent of taxpayers out there with no kids in the schools that’s doing a disservice to them.”

Board member Mike Roosevelt added, “I’m concerned that if we get into the habit of keeping expenses unchecked and raising taxes to balance we will quickly be in a situation where we have to rely on tax increases and that is not sustainable.”

Joe Hidalgo expressed appreciation to Palli and Tate for expressing their concerns to the board over the longer term projections. “It was only a few years ago that it was me and Mark Byelich who were sitting here looking at the five year projection and very concerned about what those numbers would see. I’ve been in your shoes and I still have those concerns.

"But had we gone forward and raised taxes by 3 1/2 to 4 percent last year that would have made it a lot easier for the administration to get the $6.5 million extra that they were asking for because we’d have the money for it," he said. "If you keep raising taxes we’re going to spend it, but at what expense to all stakeholders?

"It’s a fine and delicate balance," said Hidalgo. "We’re saying two percent because we’re going to need a slow and steady increase to keep up with inflation. If we keep raising taxes more than we really need to it’s going to burden some of the people and we are going to find ways to spend that money.”

Board President Ed Salamon warned against carrying too large of a fund balance, noting that a number of districts have been called out for passing extreme tax increases while carrying a large fund balance.

“To tax somebody and to have a fund balance in the end, that’s a hard sleep that night,” he said. “My take is we should continue with the recommendation made many months ago - a two percent tax increase and some use of the fund balance. That’s where I want to be. I have no problem doing this and continuing conversations like getting additional security especially at our middle schools.”

The preliminary final budget is available for review on the district’s website and at the district offices for the next 30 days.

A vote on the final budget is scheduled for June.